Selling a drywall contractor in Canada

An owner who has decided to sell a drywall contractor has a particular problem: the people who may matter most to the price, the general contractors who award the work and the crew who does it, are also the people who should not hear about the sale by accident. This guide follows the order of preparing, disclosing and closing. It covers what to put in order before anyone is told, how to handle confidentiality with customers and crew, what the workers’ compensation board will need, and what to have ready for a buyer. Start earlier than feels necessary, because some steps depend on third parties, such as the board, your accountant and any lender holding a lien on equipment. Keep one person, such as your lawyer, in charge of the timeline so that requests from a buyer do not reach you in three different forms.

Put the records in order before anyone is told

BDC says an accountant is important for preparing year-end and interim financial statements, projections and other documents buyers typically ask to see as part of due diligence. Add project-level records to that list: a schedule of current and recently finished jobs, the contract or purchase order behind each one, any open change orders, and any callbacks still unresolved. If fire-rated assemblies were part of past work, gather the drawings and inspection records. Check also that the equipment list matches what you own, that every item you plan to sell is free of any lien, and that your insurance and workers’ compensation accounts are current. Fixing gaps before anyone is negotiating is something you control.

Decide who learns what, and when

BDC warns that, depending on a listing site’s confidentiality procedures, word could get out to employees, customers or suppliers that you are selling. For a contractor whose value rests on general-contractor relationships, that is a risk to plan for. Use a non-disclosure agreement before sharing detail, describe the business without naming accounts in early conversations, and decide in advance whether the crew hears from you before or after a buyer is chosen. Whether and when to tell the general contractors yourself is a judgment to discuss with your advisors. Weigh the risk of a leak against the risk of a buyer who cannot speak to the people who give you work. You could agree with a buyer on a point in the process, after the buyer is committed and before closing, when introductions are made together. Whatever you choose, write the plan down so that nobody on your side improvises.

Asset sale or share sale, and the board

The structure changes what the buyer takes on. Read the guide on asset sale versus share sale and take it to your lawyer early. Workers’ compensation boards may ask about the structure too. In Ontario, the WSIB says that if you are selling or purchasing a business’s assets you should get a purchase certificate, that a share sale does not need one because no new legal entity is created, that the request must be made before the date of sale, and that it asks whether the transaction is a share or asset sale. WorkSafeBC says a buyer of a firm’s assets should contact it before buying, and that a clearance letter protects the buyer against liens for the seller’s unpaid premiums. Manitoba’s board has a page on changes to a business, including closing or selling one, and other provinces may run their own processes. Ask which board covers your crews, and what it needs from you and in what order. If your company works in more than one province, the answer may be more than one board.

What to have ready for a buyer

Prepare records in four groups before you list:

• Customer records: who the general-contractor accounts are, how long you have worked for each, and how much of a year’s work each one represents
• Crew records: who is an employee and who is a subcontractor, how long each has stayed, and what each is paid
• Compliance records: your board account status and any claims, plus the documents behind fire-rated and multi-unit work
• Asset records: the equipment list, who owns each item, and any financing or liens registered against it

Staying involved after closing

BDC notes that a seller may remain involved after a sale through vendor financing, an earn-out, a phased transfer of ownership or a role as an executive, board member or advisor. For a contractor whose relationships are personal to the owner, ask whether a transition period of introductions to the general contractors is something the buyer wants. It also ties you to the outcome, so write down exactly what you are expected to do, for how long, and what happens if a general contractor leaves anyway. Vendor take-back financing is covered in its own guide.